Business, 06.05.2021 01:00 Josephzaz

Pepper's Pizza is considering adding an additional pizza oven to help meet their increased carryout and delivery demand. The oven would cost $20,000 and require a $500 increase in net operating working capital which will be recovered at the end of the life of the oven.. The oven has a 3-year expected life and falls into the 3-year MACRS depreciation class with the following annual depreciation percentages: yr 1: 33%
yr 2 45%
yr 3 15%
yr 4: 7%
The new oven would increase annual revenues by $20,000 and increased annual operating costs will be 40% of increased revenues. The company's tax rate is 30%. The oven would have a salvage value of $1000 at the end of its 3-year life. What is the year 3 total cash flow (operating + terminal) for this project?
A. 10,300.
B. 10,920.
C. 10,000.
D. 10,800.

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Pepper's Pizza is considering adding an additional pizza oven to help meet their increased carryout...

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